October 29, 2024
By Idris Buba
Governors, under the aegis of the Northern States Governors’ Forum, have voiced their strong opposition to the proposed shift to a Derivation-based Model for Value Added Tax distribution.
The 19 state governors in the Northern region aired their strong displeasure on the recent Tax Reform Bill the Federal Government submitted to the National Assembly for approval in a communique issued after a strategic meeting in Kaduna
They particularly rejected the proposed shift to a Derivation-based Model for Value Added Tax distribution.
The governors claimed that the proposed model would be at the disadvantage of the northern states and other less industrial regions.
The communique was read by the Chairman of the NSGF and Governor of Gombe State, Muhammad Yahaya.
The latest development comes amid multiple debates surrounding resource control and the distribution of Value Added Tax revenue among states. Many northern states where Sharia law is practiced prohibit the sale of alcoholic beverages but still receive a share of VAT collected from alcohol sales.
Disapproving this policy, the governors said that VAT is currently remitted based on the location of company headquarters rather than where goods and services are consumed.
They added that the measure will negatively affect the distributed revenue from the Federal Accounts Allocation Committee
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However, in the new tax reform bill, the Taiwo Oyedele-led panel proposed the amendment of the distribution formula to a Derivation-based Model.
Here are excerpts of the communique as read by Chairman of the NSGF and Governor of Gombe State, Muhammad Yahaya, “The forum notes with dismay the content of the recent Tax Reform Bill that was forwarded to the National Assembly. The contents of the reforms are against the interest of the North and other sub-nationals, especially the proposed amendment to the distribution of Value Added Tax to a Derivation-based Model.
“This is because companies remit VAT using the location of their headquarters and tax office where the services and goods are consumed. In view of the foregoing, the Forum unanimously rejects the proposed Tax Amendments and calls on members of the National Assembly to oppose any bill that can jeopardise the well-being of our people.”
The forum further demanded equity and fairness in national policy implementation and no geopolitical zones should be shortchanged.
“For the avoidance of doubt, the Northern Governor’s Forum is not averse to any policies or programmes that will ensure the growth and development of the Country.
“However, the forum calls for fairness in the implementation of all national policies and programmes to ensure that no geopolitical zone is short-changed or marginalised.
“On the present economic hardship affecting the Country, the Forum is appealing to all citizens to remain calm, as the states and Federal Government are working hard to implement measures that will cushion effects of the hardship.”
Attendance at meeting included northern traditional rulers, the Chief of Defence Staff, General Christopher Musa, and other key stakeholders
